Following the resignation of James Runcie, U.S. Secretary of Education Betsy DeVos has been looking for someone to head the office of Federal Student Aid (FSA). The FSA is the largest provider of student loans in the country.
On June 20, 2017, DeVos finally chose Dr. A. Wayne Johnson, the CEO of a student loan company.
The move comes as the Department of Education looks to overhaul parts of the student loan system. This includes reviewing Public Service Loan Forgiveness and also consolidating income-driven repayment plans.
Who is A. Wayne Johnson?
Dr. A. Wayne Johnson is a veteran of the financial services industry. He is the President and CEO of Reunion Financial Services. He also helped found the company in 2012.
Reunion Financial Services originates, services, and refinances private student loans. Tapping Johnson keeps in line with the trend for business leaders as appointees in the Trump Administration.
Before founding Reunion Financial Services, Johnson formed BV Card Assets and sold it in 2012. Johnson also has a history as an executive with companies like First Data Corporation and Total System Services (TSYS). These companies deal with credit cards and payment systems technology.
In addition to being a business leader, Johnson has a Ph.D. in Higher Education Leadership from Mercer University. He also has an MBA from Emory University.
“Wayne is the right person to modernize FSA for the 21st Century,” Betsy DeVos said in the press release. “He actually wrote the book on student loan debt and will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families.”
How does A. Wayne Johnson view student loan debt?
DeVos bases her comments about Johnson on his Ph.D. dissertation, published in 2016. His dissertation focused on private student loan indebtedness and some of the points he made include:
- Student loan debt is a fact of life. Many students and parents accept that they will have to get student loans to pay for an education.
- Most people don’t understand the financial implications of student debt. The amount of debt students end up with surprises them. And so does the financial stress they feel when they finish.
- Borrowers don’t fully utilize federal loans. Often, borrowers take out private student loans without first utilizing federal loans. Johnson acknowledged federal loans usually have better repayment terms.
- Perception of financial aid officers is often negative. Borrowers believe that financial aid officers don’t fully let them know about consequences. No one told them about the large payments and potential life restrictions that come with student loan debt.
- Borrowers don’t have enough to evaluate their student loan options. Students feel like financial aid officers don’t offer them time to think about student loan options and the implications of their choices.
- Student loans are harmful. Borrowers have the perception that they have been harmed by student loans and that their future plans are negatively impacted by their student debt.
Johnson’s information tallies to some degree with reports that have come out recently, including one from the Consumer Financial Protection Bureau (CFPB) regarding how much information borrowers in default receive about affordable repayment plans.
Is everyone happy with Johnson as FSA head?
On the face of it, Johnson appears to be a solid choice, but some are skeptical of his corporate background.
Reuters reported that the group Allied Progress is less than impressed with his credentials, especially considering that there are more than 1,000 CFPB complaints again First Data, a company Johnson worked with. Allied Progress is worried that student loan defaults will increase under policies put in place by Johnson.
In the press release from the Department of Education, Johnson expressed the importance of the FSA, which serves 42 million student loan borrowers: “I have a profound appreciation for and recognition of the critical role FSA plays in advancing educational attainment by students in our nation’s institutions of higher education.”
He also affirmed a commitment to borrowers in the press release. But some advocates aren’t so sure.
Jay Fleischman, a student loan lawyer and consumer advocate, is one of those who isn’t sure this is the right move for consumers and borrowers.
“I wonder if this move is toward an end goal of getting the government out of student loan lending,” Fleischman said. “The federal government has programs in place that provides protections to borrowers that are needed.”
Fleischman said that student borrowers are restricted by their age and lack of experience in the world. “This [is] one of the areas where the federal government can do a better job,” he said. “These students need protections that private companies don’t provide. The government should be protecting student loan borrowers.”
Fleischman also went on to point out that, as an executive at TSYS, Johnson worked to collect debt. And, despite pointing out the better terms of federal loans in his dissertation, Johnson is currently the CEO of a company that makes private student loans and encourages moving away from federal student loans.
“It’s a further signal that the current administration has no intention of making things any easier for student loan borrowers. Period,” Fleischman said.
Do you have a student loan game plan?
In the past few months, the Department of Education has rolled backed Obama-era protections for student loan borrowers and has announced plans to grant an exclusive contract to a single student loan servicer.
Not only that, but the popular Public Service Loan Forgiveness program is on the chopping block. The Trump Administration budget proposal also includes raising the income cap on income-driven repayment from 10 percent to 12.5 percent. These are moves that have been met with dismay from student borrower advocates.
However, the proposal to consolidate income-driven plans and provide loan forgiveness after 15 years might be something that borrowers can get behind.
No matter what happens, though, now is the time to review your student loan options. Use student loan calculators to figure out which payment plan might be best for you. Consider refinancing to a lower interest rate and payment.
There’s a lot of change coming — so be ready. Take steps to pay down debt and grow your savings so that you’re prepared for whatever policies come next.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|